The official blog of Illinois Issues magazine,
published by the Center for State Policy and Leadership
at the University of Illinois Springfield

Monday, November 07, 2011

Plenty on the table heading into last week of veto session

By Jamey Dunn

When lawmakers return to Springfield to wrap up their veto session this week, borrowing to pay off the state’s backlog of overdue bills may be on the table, as well as several items of unfinished business from the session two weeks ago.

Borrowing
A new plan from Gov. Pat Quinn to borrow $4.5 billion to pay down some of the state’s overdue bills could surface this week. Quinn pitched an $8.75 billion borrowing plan in his fiscal year 2012 budget proposal, but it never gained traction. House Minority Leader Tom Cross said the idea of a smaller borrowing package came up in leader’s meetings last week and that Quinn voiced interest in engaging in some horse trading — Republican votes on a borrowing plan for his support of a business friendly tax incentive package. A spokesperson for Quinn said that the governor pitched the idea as part of an overall “jobs creation” package. Paying vendors could potentially halt layoffs and would inject billions into the state’s economy.

Rushville Democratic Sen. John Sullivan, who sponsored a package of borrowing bills, said legislators are coming around to the idea. “I’ve been talking to a lot of members and colleagues about the issue and trying to explain to them why we need to pay our bills. … And I feel that there has been momentum.” While some lawmakers may be warming to the idea, recent polling shows voters are not. A Paul Simon Public Policy Institute survey of 1,000 Illinois voters found that only 39 percent favored borrowing to address the backlog. The poll had a margin of error of plus or minus 3 percentage points. "If every dime of that borrowing package were dedicated to paying past-due bills and making pension contributions on time, it might be something citizens would be willing to tolerate," institute Director David Yepsen said in a prepared statement. "Even that would be a tough sell, since many voters thought the last round of tax increases were supposed to pay bills on time, and they don't feel that happened."

Sullivan said that he is not working directly with Quinn on a revamped plan, but he said he is willing to tweak his legislation in whatever ways needed to garner support. When Sullivan called a measure to borrow about $6.2 billion for a vote in the spring, it only got 19 “yes” votes. “I definitely think that we’re at a better place now than we were when the plan was introduced,” he said. At least one Republican vote will be needed in his chamber for borrowing legislation to pass.

Business package
Lawmakers will likely consider a second incarnation of a tax incentive package meant to keep large businesses in the state. Senate President John Cullerton sponsored a plan to offer a tax cut to the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, to keep it from moving out of state. Terrence Duffy, chairman and chief operating officer of the CME Group, starting making such threats after realizing that the company would pay more than $150 million in income taxes under the state’s recent income tax increase. During a committee hearing on the measure last week, Republicans said they could not support giving target breaks to one company. They said they wanted a broader relief package that would help out other businesses, too.

A revamped plan could offer relief to Sears, which has also threatened an exit, as well as some generally business friendly sweeteners, such as an extension of a research and development tax credit.

Under the plan, both chambers would agree to put a spending cap on how much the governor can offer public employee unions in wage increases under a new contract. Current contracts are set to expire in 2012. “What we’re talking about is about a two-and-a-half-year obligation on spending. Well, I think the legislature has a rightful place in this bargaining,” said Madigan when the resolution was read on the House floor two weeks ago.

Traditionally, the legislature has not been at the forefront of contract negotiations. But lawmakers became frustrated with Quinn after he promised no public union employee layoffs through the end of the current fiscal year. Quinn has since gone back on that promise by backing a plan for layoffs and facility closures. He also froze union pay raises included in contracts. Quinn said both moves are necessary because the legislature did not include enough money in the budget to cover personnel costs and keep basic services running through the end of the fiscal year. Union officials say that Quinn has violated their contract and are taking the state to court.

Cross went one further than Madigan, proposing an amendment that would halt pay increases until the state has had a budget surplus for two years. “Our priority is on the protection of jobs in this state and ensuring that we get our fiscal house in order above all else,” Cross said in a written statement. “We should not enter into any new contracts that guarantee wage and benefit increases at a time when the governor is talking about closing seven state facilities that serve those with mental health needs, at-risk youth, and house dangerous criminals.” The Republican leader has said the facilities Quinn want to shutter are primarily in Republican districts and accused Quinn of playing politics when choosing his closure targets.

Madigan called upon the House Revenue and Finance Committee to set the number for the cap. The committee may also consider Cross’ proposal. The House Revenue and Finance Committee has two hearings scheduled for next week. The first is scheduled for today.

Insurance Exchange
Legislators may also consider a pivotal component of the federal health care reform law. Illinois is working to set up its own insurance exchange, an online marketplace meant to drive down the cost of insurance policies by encouraging competition. Health care advocates are pushing for lawmakers to approve legislation that would determine who would serve on the board overseeing the marketplace and who would ultimately pay for the exchange. “We want the state to move forward, and we are optimistic,” said Jim Duffett, executive director of the Campaign for Better Health Care.

The major sticking point is who will be eligible to sit on the board. Advocacy groups want insurance industry insiders barred from holding any voting power, because they could potentially profit from board decisions. They say those in the industry should hold purely advisory positions. Duffett said the board should be made up of “health care experts, small business owners and consumers.” He likened allowing insurance professionals voting power to letting a fox into the hen house.

Representatives of the industry say their hands-on expertise is needed on the board to shape an exchange that works well in practice. “To suggest that insurance expertise should be prohibited on the board, as some have … we believe is analogous to suggesting that an aeronautical engineer should be prohibited from serving on the board of Boeing Aircraft,” said Phil Lackman, Illinois vice president of government relations for the National Association of Insurance and Financial Advisors.

The House Insurance Committee has a hearing scheduled for Tuesday. “We do believe that there will be some action taken on Tuesday,” Duffett said.

Gambling
Supporters of a gaming expansion package are still looking for a plan that can pass in the legislature and get Quinn’s support. Quinn is opposed to Senate Bill 744, which passed last spring and would allow for five new casinos and slots at horse racing tracks. Quinn laid out his recommendations days before the veto session started, and Sen. Terry Link, sponsor of SB744, backed a bill that he said was based on those suggestions. Quinn did not agree and opposed the bill. Link held off on calling the legislation, SB747, last week and said he wanted to continue talks with Quinn.

This week, Quinn said that he was not engaged in negotiations on gaming. He said passing an expansion is not one of his priorities, but he is “open minded” about the concept. After meeting with Quinn last week, Cullerton told reporters that he was optimistic about finding a compromise. “I expect we will have a gaming bill going on next week as well. … We had a lot of productive input from the governor in ways in which we could correct the bill that we did pass. I can’t say we’ve narrowed the differences to agreement, but I think we’ve made a lot of progress. A lot of reforms suggested by the gaming board, we can incorporate into the bill.” More than half — 57 percent — of respondents in the Paul Simon Public Policy Institute survey said they backed expanded gambling as a way to bring in more state revenue.

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The bureau follows state government from the Capitol Press Room and writes articles for Illinois Issues magazine, published by the Center for State Policy and Leadership at the University of Illinois at Springfield.
Contact: illinois.issues@gmail.com